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Weak hands are selling in a hurry, but long-term Bitcoin traders have seen it all before.
Although newcomers to the Bitcoin market have been panic-selling at a loss, the recent market decline has not bothered the veterans.
Bitcoin prices fell to their lowest levels in 20 weeks on Monday, May 17, as markets sought support near $42,000 in response to Elon Musk’s hints that Tesla may soon sell its BTC stash.
According to Glassnode, an on-chain analytics provider, the crash mostly saw younger traders leave their positions at a loss, while long-term hodlers held their ground.
During the drop, Bitcoin’s modified Spent Output Benefit Ratio (aSOPR), a measure that indicates whether BTC was profitable or losing money when it was last transacted on-chain, dropped below 1.0, according to Glassnoded. An aSOPR less than 1.0 means that aggregate losses have been realised on-chain, and are more pronounced in short-term investors (coins older than 155 days) — traders who bought during the 2021 bull market.
The overall number of addresses with a non-zero BTC balance has also fallen by 2.8 percent from its previous all-time high of 38.7 million, when over one million traders liquidated their holdings. According to Glassnode:
“A total of 1.1M addresses have spent all coins they held during this correction, again providing evidence that panic selling is currently underway.”
Glassnode asserted that the instability in the share of supply represented by short-term investors is suggestive of panic selling, acknowledging the similarities between current supply delivery trends and those seen during the 2017 bull season’s macro height. Markets typically reach a macro plateau as new holders own a sizable portion of overall production.
Short-term holders’ coins recently reached a high of 28 percent of the circulation stock, or about 5.3 million BTC.
According to Glassnode, Bitcoin has lost more than 28 percent since reaching an all-time high of $63,600 on April 13. The retracement is the most significant reversal in the ongoing bull market.